Cycle Counting vs. Physical Counting: Which Is Best?

Taking inventory is one of those chores that many businesses put aside for another day. It’s tiresome and may require shutting down all or part of the warehouse to take an accurate count.

But what’s worse than losing time is losing inventory value. The longer that inventory remains in the warehouse, the greater the depreciation. Unsold inventory takes up valuable square footage that could be used to store profitable goods.

5 Reasons to Conduct Inventory Counts

There are many reasons to conduct an inventory count. These include:

  1. Tracking current inventory status: It’s impossible to know what’s selling briskly or lagging until you’ve taken count in your warehouse. Although you can rely on sales reports, they only tell part of the story. Physical inventory counts can help you assess returns, aging products, stock rotation, and other issues that may be causing your business losses.
  2. Identifying shrinkage: Frequent stock counts ensure that any potential shrinkage is caught early and investigated promptly. Losses from theft, damage, or improper inventory management can quickly mount up, but if caught early, can be addressed and rectified.
  3. Improving forecasting: When you see what’s selling from the current inventory, you can get a better picture of future trends.
  4. Fixing warehouse issues: By physically walking through the warehouse to take inventory, you’ll gain firsthand knowledge of how quickly products are checked in from receiving, how returns are handled, and whether your team is following safety procedures, inventory management processes, and other important safeguards.
  5. Knowing inventory value: Your business inventory represents a significant investment. It counts as an asset on the books. Tracking its current value is vital to gather an accurate financial picture of your business.

Cycle Counting vs. Physical Inventory: Pros, Cons

Which is better for your business—cycle counting or taking a physical inventory? Let’s look at the pros of each.

Cycle Counting

  • Less disruptive to your warehouse
  • Can be conducted over weeks
  • Uses fewer staff resources

Physical Inventory

  • The most accurate of any type of inventory
  • Provides a comprehensive picture of inventory assets
  • Completed in a shorter time frame

The biggest drawback to conducting a physical inventory is that it generally requires shutting the warehouse down completely to take inventory. Some companies close overnight during a slow period to minimize the disruption to the business.

The method you choose depends on your business goals and needs. If you know that you can conduct a full inventory in several hours, shutting down and completing a physical inventory once or twice a year is the best solution. Others may find that frequent cycle counting works better.

Scanco Barcode Scanners Automate Inventory Counts

One of the easiest ways to conduct faster, more accurate inventory counts is by automating the system. Changing from pen and paper inventory to scanning barcodes enables you to cut down the time it takes to complete inventory.

Scanco’s barcode scanning system uses software that works on any mobile device. There’s no need to purchase costly hardware or scanner equipment. Users download the software to any mobile device. Scanning items is as easy as swiping a QR code or taking a picture with a cellphone. The inventory data can be transmitted to the company’s ERP or accounting system (if using a cloud-based system) for immediate inventory updates.

If it’s time to update your inventory methods or improve them, talk to us about Scanco barcode scanning software. Whether you use physical counts or cycle counts, the results will be faster, more accurate inventory counts.

Emerald TC

Emerald TC provides software and consulting for manufacturing companies. We can help you choose the right accounting software, ERP system, payroll, or other software for your needs. Contact us or call 678-456-6919 for more information.

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